The steep fall in the price of natural rubber has taken the sheen off a usually vibrant Onam market, with sales of everything from TV sets to high-end luxury cars taking a big hit.
More than 90 per cent of India’s rubber is from Kerala. Over a million farmers, both big and small, are into rubber cultivation in the State, the biggest chunk of them being in the Idukki- Pathanamthitta- Kottayam belt. The price crash has already shaken many.
Plummeting rubber price has amplified the erosion of the average selling price, says a prominent white goods seller here. He says sales are easily down more than 30 per cent, especially in places such as Kottayam and Idukki. People are averse to spending big on an entire range of products, so the margins are under big pressure. “We hope to just about manage to nudge last year’s Onam sales figures, whereas we should have seen a normal annual growth of 20 to 30 per cent,” he said.
Key factor
Rubber has been a key factor in the realty sector and property prices have often moved in tandem with the rubber graph, says Paul Raj, president, CREDAI, Kochi. The situation is serious given that there is a lot of ambiguity about the crop’s future, he adds.
A dealer in pre-owned cars in Kochi says there is no dearth of enquiry but deals are just not going through. The trend is all the more visible with regard to customers from dominantly rubber-growing districts such as Kottayam, Pathanamthitta and Idukki, he says.
The automobile market too is generally down and the festive season is expected to generate some demand, though a long-term revival is what the industry needs, says P. Balendran, vice president, General Motors India. Another luxury car maker says that sales are down for the entire industry and not just for the high-end brands.
Shaji Mathew of Builders’ Association of India says that there is a marked fall in demand for flats. The demand is down about 30 per cent and nobody appears to be ready to make an investment in flats — unlike in the past when the cash-rich used the segment as a haven.
The only sector in central Kerala that would appear to have escaped the aftermath of falling rubber prices is banking, thanks largely to the cushion of its NRI population.
A senior banker said banks still faced no serious issues with repayments in central Kerala, despite the rubber crisis. This was largely because of the increase in NRI remittances. The devaluation of rupee has played a big role and NRI remittances has grown 30 per cent during the current year, he adds.
